In the fast-paced world of business travel, every penny saved can significantly impact the bottom line. However, many organizations unknowingly lose money by spending outside of their managed travel program, resulting in what’s known as “travel leakage.”
In fact, in a recent Christopherson survey of 100 travel managers, less than half estimated that they experienced travel leakage of 10 percent or less.
Addressing travel leakage by leaning on a strong travel management program can lead to substantial savings and improved travel management efficiency.
What kind of savings are we talking about?
“Looking across our accounts for the last year, we've been able to drive $72 million in savings, which is 10 percent,” says Matt Cameron, Christopherson’s chief consulting officer.
Let's dive into five primary sources of travel leakage and learn how a travel management program can help you fix them.
Leak: When travelers bypass their travel management program and book directly with vendors like airlines, hotels, and rental cars.
Impact: One of the big perks to a travel management program is access to negotiated and discounted rates that are already established. Circumventing this process leads to losing out on those exclusive rates and spending money you don’t need to spend. When travelers book directly, not only do they miss out on potential cost savings, but also benefits like centralized billing, traveler tracking, and policy compliance as well.
Another huge impact, outside of savings, is risk management.
“If travelers are booking outside of your program and not using your travel management company, if there's any emergency, like a natural disaster for example, your travel management company does not have visibility to where that traveler may be,” explains Paul Foster, account manager at Christopherson.
Solution: Encouraging travelers to utilize the managed program requires a simple, yet multifaceted, approach. First, be sure to emphasize the advantages and safety of using preferred vendors, such as discounted rates, loyalty benefits, and streamlined booking processes. Second, provide user-friendly booking platforms and comprehensive training to ensure ease of use and convenience for travelers. Additionally, implementing strict policy enforcement measures and incentives can further encourage compliance with the managed program.
Leak: “One area where we often find leakage is in the online travel agency space,” says Foster. “These are your Orbits and Expedias and the many travel metasearch engines that are out there right now.”
Impact: OTA bookings pose challenges in terms of visibility and control. They often result in fragmented travel data, making it difficult to track and manage expenses effectively. Additionally, travelers may encounter hidden costs or restrictions that don’t exist in the managed program.
Solution: Educating travelers about the benefits of booking through the managed program is critical. Highlight the advantages of negotiated rates, policy adherence, and centralized reporting offered by the managed program. Call out online travel agencies directly and discuss their disadvantages. Finally, use the provided technology to streamline the booking process and give travelers the easiest access possible to preferred vendors and negotiated rates.
Leak: Specialized platforms for conference-related bookings, departing from the managed travel program.
Impact: Conference booking sites add complexity to travel management by creating separate channels for booking accommodations and transportation. This fragmentation results in limited visibility and control over travel expenses and undermines negotiated rates and benefits previously established with vendors.
“If your organization attends a lot of conferences, they may be directed to a specific website where they need to make certain elements of bookings as well,” says Foster. “But within a managed program, we find that there is a significant amount of leakage that can occur when a traveler only books the airline tickets through their travel agency.”
Solution: Integrating conference bookings into the managed program is essential for getting consistency, policy adherence, and comprehensive data tracking out of your program. Work closely with conference organizers to communicate and streamline the booking processes and centralize travel arrangements within the managed program. Providing travelers with clear guidelines and incentives helps make it easy to book conference-related travel through the managed program.
Leak: Booking only a portion of travel (e.g., flights) through the managed program while arranging other travel needs independently.
Impact: Partially managed bookings compromise the effectiveness of the managed program by diluting negotiated rates and policy compliance. This leakage leads to missed cost-saving opportunities and challenges efforts to centralize travel management.
“There’s also considerable cost because going outside of the travel program allows travelers to bypass whatever travel policy program is in place,” says Foster. “They have the option of not being compliant with the travel program as it’s stated.”
Solution: Enforcing the stated travel policy is critical for minimizing partially managed bookings. Clearly communicate the benefits of using your program for every step of the travel booking process and why it’s important. Communicate benefits such as enhanced cost savings, streamlined booking processes, and comprehensive traveler support to help avoid this common cause of leakage. And as always, use the provided technology to provide travelers with user-friendly booking platforms and real-time access to preferred vendors and negotiated rates.
Leak: Unused ticket credits resulting from canceled or changed travel plans.
Impact: Unused tickets lead to wasted resources and missed cost-saving opportunities. Without effective management, organizations risk forfeiting funds and experiencing budget inefficiencies.
“It's estimated that 11 percent of a company's travel spend is locked into unused tickets, which means it's money left on the table,” explains Foster. “That money is often forfeited because tickets haven’t been repurposed and end up expiring.”
Solution: Establishing effective, unused ticket management protocols is essential for maximizing ticket value and minimizing financial losses. Proactive traveler notifications, real-time reporting, and transferable options are all effective strategies for ensuring that unused ticket credits are properly utilized. Providing travelers with clear guidelines and incentives to repurpose unused tickets can help mitigate the impact of cancellations and changes on travel budgets.
By implementing and communicating these solutions, your organization can effectively address the sources of travel leakage and optimize its managed travel program for maximum cost savings and efficiency. Proactive education, policy enforcement, and strategic partnerships with vendors are key to plugging the leaks and getting the most long-term success out of your travel management program.
Ready to take your corporate travel program to the next level? Schedule a demo to learn how Christopherson’s dynamic technology and 24/7 expert support can help your organization.
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